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CA Intermediate · Financial Management and Strategic Management · Introduction to Strategic Management

Kaveri Foods, a packaged snacks company, decides to enter the ready-to-eat meals market, which needs new plants, new distribution partners and a fresh brand positioning. The board takes the decision after studying long-term market trends, and the commitment of large resources makes it hard to reverse. Which characteristic of strategic decisions is MOST directly highlighted by the difficulty of reversing the decision?

The characteristic highlighted is irreversibility arising from heavy resource commitment. Strategic decisions such as entering a new market with new plants and distribution tie up large resources and cannot be undone cheaply. Operational decisions, by contrast, are routine, short-term and taken lower in the hierarchy.

  1. AIrreversibility due to heavy resource commitmentCorrect
  2. BShort-term operational focus
  3. CDelegation to first-line supervisors
  4. DRoutine and repetitive nature

Explanation

Strategic decisions involve large commitments of resources and are not easily reversed without heavy cost. The scenario stresses new plants and partners and the difficulty of reversal, pointing to irreversibility. The other options describe operational decisions, which are routine, short-term and taken at lower levels.

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